Administered price theory

What does Administered price theory mean in American Law?

The definition of Administered price theory in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

A theory proposed by some economists that the prices charged by most or at least many large industrial corporations are “administered,” i.e., not set by market forces but by actual or tacit collusion among the firms (which are all “price makers” rather than “price takers”) making up the industry. These administered prices are supposed to be set with reference to cost factors and to be much less responsive to market conditions than competitively determined prices, but they are not immune from

market forces, and their very possibility depends upon imperfect competition. There is some evidence from some industries of apparent imperviousness of prices to changes in market conditions, but the administered price theory cannot be said to have been either widely or generally proved or disproved.